Equity Incentive Plans and Benefit Plans
 6 Months Ended
Jan. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Equity Incentive Plans and Benefit Plans
Equity Incentive Plans and Benefit Plans
Stock Option and Award Activity
The following table summarizes information about shares available for grant and outstanding stock option activity: 
 
 
 
Options Outstanding
 
 
 
 
 
Shares
Available for
Grant
 
Number of
Shares
 
Weighted
Average
Exercise
Price
per Share
 
Weighted
Average
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic
Value
(in thousands)
Balance at July 31, 2013
557,585

 
10,047,569

 
$
6.29

 
2.9
 
$
121,227

Shares reserved for issuance
5,670,469

 


 
 
 
 
 
 
Restricted stock awards granted
(4,350,155
)
 


 
 
 
 
 
 
Restricted stock awards forfeited
1,238,196

 


 
 
 
 
 
 
Options exercised
—

 
(2,778,312
)
 
3.73

 
 
 
42,871

Options cancelled
131,142

 
(131,142
)
 
19.98

 
 
 
 
Balance at July 31, 2014
3,247,237

 
7,138,115

 
7.03

 
2.0
 
82,533

Shares reserved for issuance
5,377,830

 


 
 
 
 
 
 
Restricted stock awards granted
(2,441,672
)
 


 
 
 
 
 
 
Restricted stock awards forfeited
1,016,745

 


 
 
 
 
 
 
Market stock units granted
(595,000
)
 


 
 
 
 
 
 
Market stock units forfeited
30,000

 
 
 
 
 
 
 
 
Options exercised
—

 
(1,996,705
)
 
3.89

 
 
 
32,147

Options cancelled
15,547

 
(15,547
)
 
21.82

 
 
 
 
Balance at January 31, 2015
6,650,687

 
5,125,863

 
$
8.21

 
1.6
 
$
49,331


Restricted Stock Award Activity
The following table summarizes information about non-vested restricted stock awards and units: 
 
Shares
 
Weighted 
Average
Grant Date
Fair Value
per Share
Balance at July 31, 2013
10,787,754

 
$
18.87

Awards granted
4,350,155

 
18.67

Awards vested
(5,009,273
)
 
19.07

Awards forfeited
(1,238,196
)
 
19.28

Balance at July 31, 2014
8,890,440

 
18.61

Awards granted
2,441,672

 
22.82

Awards vested
(2,520,714
)
 
20.42

Awards forfeited
(1,016,745
)
 
19.17

Balance at January 31, 2015
7,794,653

 
$
19.26


Fair Value Disclosures
Employee Stock Options
The fair value of each option is estimated on the date of grant using the Black-Scholes model. There were no stock options granted during the reporting periods presented.
Employee Stock Purchase Plan
The fair value of the purchase right for the Employee Stock Purchase Plan ("ESPP") is estimated on the date of grant using the Black-Scholes model with the following weighted average assumptions:
 
Six Months Ended January 31,
 
2015
 
2014
Risk-free interest rates
0.1% to 0.5%
 
0.1% to 0.4%
Expected term (in years)
0.5 to 2.0
 
0.5 to 2.0
Dividend yield
—%
 
—%
Volatility
37.7% to 49.8%
 
57.2% to 64.4%

The following table summarizes the shares issued and the weighted average purchase price per share for each ESPP purchase date during the first half of fiscal 2015 and 2014:
 
September 1,
2014
 
September 1,
2013
Shares issued
565,396

 
432,749

Weighted average purchase price per share
$
14.64

 
$
14.12


Market Stock Units
In September 2014, the Compensation Committee of the Company's Board of Directors approved the adoption of the Market Stock Unit program with the purpose of aligning key management and senior leadership with stockholders' interests over the long-term and to retain key employees. Market Stock Unit ("MSU") awards are granted under the Company's 2007 Equity Incentive Plan.
In the first quarter of 2015, the Company granted 595,000 MSUs, with 100% of the shares to be earned upon the achievement of an objective relative total stockholder return measured over a three-year performance period. There were no MSU awards granted during the second quarter of fiscal 2015.
Each MSU award granted in the first quarter of fiscal 2015 contains three separate tranches of an equal number of shares, with 100% of the shares of Tranche 1, Tranche 2, and Tranche 3 to be earned based on the achievement of an objective total stockholder return measured over one-year, two-year and three-year performance periods, respectively. MSUs will be awarded and fully vested upon the Compensation Committee's certification of the level of achievement following the performance period of each tranche. MSU participants have the ability to receive up to 150% of the target number of shares initially granted.
The fair value of each MSU award is determined by multiplying the fair value per share by the underlying number of shares. The fair value per share was determined on the grant date using the Monte Carlo valuation methodology and the assumptions described in the table below. The fair value per share for Tranche 1, Tranche 2, and Tranche 3 is $28.10, $26.90 and $26.74, respectively. The Company amortizes the fair value of each MSU award using the graded-vesting method, adjusted for estimated forfeitures. Stock-based compensation expense associated with participants who fulfill their requisite service period is not reversed even if the performance conditions are not met. However, stock-based compensation expense is reversed for participants who forfeit their MSU awards prior to fulfilling their requisite service period.
The fair value of the MSUs granted during the first half of fiscal 2015 was estimated using the following weighted-average assumptions:
 
Six Months Ended
 
January 31, 2015
Risk-free interest rates
1.03%
Expected term (in years)
2.87
Dividend yield
—%
Volatility
50.73%

As of January 31, 2015, the shares awarded under the MSU program have yet to be earned. The following table summarizes information about the MSU awards granted in the first half of fiscal 2015:
 
Target
Shares
Granted
 
Maximum
Shares Eligible
to Receive
Balance at July 31, 2014


 


Awarded
595,000

 
892,500

Forfeited
(30,000
)
 
—

Earned
—

 
—

Balance at January 31, 2015
565,000

 
892,500


The following table summarizes information about the outstanding MSUs at January 31, 2015:
 
Number of
Shares
 
Weighted
Average Remaining Contractual Life
 
Aggregate
Intrinsic
Value (*)
 
 
 
(years)
 
(in thousands)
MSUs outstanding
565,000

 
2.5
 
$
9,368

MSUs vested and expected to vest
531,773

 
2.5
 
$
8,817

(*) The intrinsic value is calculated as the market value as of the end of the fiscal period. As reported by the NASDAQ Global Select Market, the market value at January 31, 2015 was $16.58.
Stock-based Compensation Expense
Stock-based compensation expense consists primarily of expenses for stock options, restricted stock awards, MSUs, and employee stock purchase rights granted to employees. The following table summarizes stock-based compensation expense recorded in the Condensed Consolidated Statements of Operations:
 
Three Months Ended January 31,
 
Six Months Ended January 31,
 
2015
 
2014
 
2015
 
2014
 
(in thousands)
Cost of revenue
$
1,745

 
$
2,202

 
$
3,444

 
$
4,360

Research and development
8,977

 
11,306

 
18,541

 
22,114

Sales and marketing
8,902

 
11,071

 
18,478

 
21,382

General and administrative
3,844

 
4,165

 
7,558

 
8,307

Restructuring charges
—

 
—

 
273

 
—

Total
$
23,468

 
$
28,744

 
$
48,294

 
$
56,163

The following table presents stock-based compensation expense by award-type:
 
Three Months Ended January 31,
 
Six Months Ended January 31,
 
2015
 
2014
 
2015
 
2014
 
(in thousands)
Stock options
$
333

 
$
1,259

 
$
1,016

 
$
2,958

Stock awards
18,631

 
25,098

 
39,438

 
48,932

Employee stock purchase plan
1,950

 
2,387

 
4,073

 
4,273

Market stock units
2,554

 
—

 
3,767

 
—

Total
$
23,468

 
$
28,744

 
$
48,294

 
$
56,163


Stock Repurchase Program
As of January 31, 2015, the Company's Board of Directors had authorized a stock repurchase program for an aggregate amount of up to $500.0 million (consisting of an original $100.0 million authorization on June 13, 2012, plus subsequent authorizations of $100.0 million on July 15, 2013, $100.0 million on October 9, 2013, and $200.0 million on February 20, 2014).
The Company is authorized to make repurchases in the market until the Board of Directors terminates the program or until such repurchases reach the authorized amount, whichever occurs first. Any repurchases under the program will be funded either from available working capital or external financing. The number of shares repurchased and the timing of repurchases are based on the price of the Company's common stock, general business and market conditions, and other investment considerations. Shares are retired upon repurchase. The Company's policy related to repurchases of its common stock is to charge any excess of cost over par value entirely to additional paid-in capital.
During the second quarter and first half of fiscal 2015, the Company repurchased a total of 4,181,863 and 5,309,470 shares for a total purchase price of $80.0 million and $105.0 million, respectively. During the second quarter and first half of fiscal 2014, the Company repurchased a total of 4,653,460 and 11,017,240 shares for a total purchase price of $80.0 million and $193.5 million, respectively. As of January 31, 2015, remaining funds available under the stock repurchase program totaled $25.9 million.